Questions about company car

1

Hello,

I have 2 questions about having a company car and how to record the car related transactions in the Manager.

The questions are specific for rules in Sweden, but could be related to many other countries.

  1. I am leasing a car through my company. The company pays an X (+ 25% VAT) amount every month to the finance company through which the car is leased (so the total amount paid is 1.25X).

Now according to the rules in Sweden the VAT paid on the leased car is not 100% deductible on the VAT return. The company can deduct only 50% of the VAT on the car lease cost.

Example: If I had a sales of 10000 SEK one month, my incoming VAT at 25% would be 2500 SEK. During the same month if I paid 3000 SEK on the car lease, my outgoing VAT at 25% would be 750 SEK. In this case my VAT liability would be 2500 - 375 = 2125 SEK (instead of 2500 - 750 = 1750 SEK).

My question is how do I record the car invoice so that my tax liability is updated appropriately.

  1. I use the same car for my private use also. So I am liable to pay employer contribution & income tax on the perceived value of car benefit.

Example: Let’s assume that employer contribution rate is 31.42% and income tax rate is 30%. If my gross monthly salary is 10000 SEK, I have to pay 3000 SEK as income tax and 3142 SEK as employer contribution. I record 3000 SEK as deduction and 3142 SEK as contribution on the employee payslip.
My net salary will be 7000 SEK in this case.

Now If the perceived value of my car benefit is 3000 SEK, I have to calculate employer contribution on 10000 + 3000 = 13000 x 31.42% = 4084 SEK and income tax would be 10000 + 3000 = 13000 x 30% = 3900. My net salary would be 6100 SEK in this case.

The car benefit value (3000 SEK in this case) is to be counted towards employee’s gross salary for tax purpose, but is not counted when counting net salary.

How do I record these items correctly in the payslip?

Hope someone can help me with this.
Thanks in advance.

/B

2

I’ve posted this before on another thread, but here it is again. Regarding 1) I believe this type of transaction is under IFRS 16 and here is a helpful video with a vehicle example: IFRS 16 Leases - updated link in the description - YouTube

3

I recommend that you consult a qualified local accountant. One important question will be whether the principal amount of the lease payments are also limited to 50% deductibility. This will depend on Swedish law.

Your second question also probably requires qualified local accounting knowledge. The answer will surely depend on the legal form of organization of your company, as well as local law.

4

Separate items for the amounts requiring different treatment. The value of each component calculated externally as you have. Payslip items can be created to credit separate accounts as required.

As for what functionality needs to be implemented, Tut is correct, that is a question for a local accountant.

5

On the assumption that the 50% VAT not claimable on the VAT return becomes an expense then this:
Account Line 1 - P&L > Car Lease 1500 + 25%
Account Line 2 - P&L > Car Lease 1875 (no tax)
Total 3750.00